The Securities and Exchange Commission (SEC) has concluded its 16-month-long investigation into PayPal's USD stablecoin (PYUSD)

The Securities and Exchange Commission (SEC) has closed its 16-month-long investigation into PayPal (NASDAQ:PYPL) stablecoin, PYUSD, as related legislation gains momentum in Congress and the financial watchdog loosens its grip on the crypto industry.

SEC Drops PayPal’s Stablecoin Investigation

PayPal disclosed in its 10-Q filing on Tuesday that the Commission closed its inquiry into the payments giant two months ago.

In November 2023, the SEC’s Division of Enforcement began a probe into the PYUSD and requested the company to produce documents. This usually includes internal communication, testimony, and other evidence relevant to the investigation.

At the time, PayPal disclosed in a quarterly report that it was “cooperating with the SEC in connection with this request.”

However, the regulator notified the payments company in February that it was closing its inquiry “without any enforcement action.”

“On November 9, 2023, the Division of Enforcement of the U.S. Securities and Exchange Commission (the “SEC”) commenced an investigation and issued a subpoena to PayPal to produce documents, including electronic documents, and other information. The SEC’s request relates to PayPal USD, a stablecoin announced by PayPal in July 2023,” part of the 10-Q filing read.

It continued: “In February 2024, the SEC closed its inquiry into this matter without any indication that any enforcement action is pending.”

Crypto Task Force Could Impact Case Resolution

The Commission started dropping or closing its crypto cases that same month.

Citing the recently created Crypto Task Force, the SEC said it could impact and facilitate the potential resolution of the cases.

The Task Force, which is being led by Commissioner Hester Peirce, was launched in late January to advise the agency on how to develop a regulatory framework for digital assets.

Since then, the SEC announced a 60-day pause on its case against crypto exchanges Binance and Gemini (CRYPTO:GEMINI).

The regulator also followed with its dismissal of lawsuits against Coinbase (NASDAQ:COIN), Kraken, and Consensys and the conclusion of its probes into Robinhood (NYSE:HOOD), Uniswap Labs, Crypto.com, among others, without any further action.

Stablecoin Regulation

The new development comes as President Donald Trump promised to make America the “crypto capital of the planet.”

The SEC and the Department of Justice (DOJ) have disbanded their crypto enforcement-focused units and changed their “regulation by enforcement” approach.

Additionally, US lawmakers are advancing legislation at the state and federal levels, including the Strategic Bitcoin Reserve (SBR) bills and stablecoin regulations.

Earlier in April, Bank of America CEO Brian Moynihan said his bank is prepared to issue a stablecoin, adding that the move would depend on the legal framework.

According to a Monday report by Politico, Senate Majority Leader John Thune told Republican lawmakers in a closed-door meeting that the chamber will vote on a stablecoin bill before the Memorial Day holiday on May 26.

In February, US Senator Bill Hagerty introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.

The proposed legislation aims to develop a framework to allow tokens like Tether’s USDT and Circle’s USDC to fall under the Federal Reserve Rules.

The bill would create “a safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto.”